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Environmental Innovation and Societal Transitions
Volume 1, Issue 1,
, Pages 115-120
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https://doi.org/10.1016/j.eist.2011.04.002Get rights and content
This paper focuses on how to deal with environmental problems, through the lenses of the New Institutional Economics. The emphasis is on the intertwined role of organizational solutions and their institutional settings. This is not to say that technological solutions to environmental problems should be dismissed. However, it is argued that ‘environmental innovation’ is often of organizational nature, deeply embedded in institutions that adapt very slowly, making ‘societal transitions’ particularly challenging. The New Institutional Economics provides some key concepts to explore these dimensions and their interactions, thus shedding light on alternative solutions and the conditions of their implementation. Most examples come from the water sector.
The Nile river basin is a major resource for millions of people. It provides fresh water to densely populated area; it is the backbone to irrigation, particularly in the Egyptian farmland; and it is also a source of energy, through the delivery of hydroelectricity. Each of these functions imposes externalities of its own: building a dam upstream will have a direct impact on agricultural activities downstream. Appropriate arrangements are needed to coordinate these activities and monitor the alternative usages of a scarce resource.
There is more to the story. The Nile river basin is 6695km long, making it the longest river system in the world, covering a huge territory. With its main tributaries, the White Nile and Blue Nile, it joins ten different countries in its network, with Ethiopia, Sudan and Egypt its main beneficiaries, making it a strategic resource. A major pollution event in Ethiopia will have a direct impact on Egyptian farmers or inhabitants in Cairo. Therefore, an efficient coordination has to be transnational. It means building a complex basin-wide institutional setting among countries with different interests and distinct political arrangements.1
The Nile case reveals problems that the water sector share with other infrastructures, with environmental issues, and with even more general concerns such as the distributional effect of reallocation of scarce resources.2 It also perfectly illustrates key issues in new institutional economics. (1) It explicitly refers to the now classical coasian example of upstream externalities on downstream users. (2) With property and/or decision rights badly defined, or not defined at all, allocative as well as distributive effects can easily end up in conflicts, even violence. (3) Beside the economic transaction costs of finding appropriate ways to allocate and monitor a scarce resource among competing users, decision makers confront the political transaction costs of reaching and stabilizing an agreement among parties embedded in different institutional settings. (4) The efficient management of a scarce resource often requires societal changes to succeed, like accepting that water has an economic value.
The point I want to make in this short note is that the research program and concepts developed by Coase, Williamson, North, Ostrom, among others, help framing and exploring these problems as well as finding solutions, or at least pointing out conditions that any solution must meet. The next section provides insights on the organizational dimension, which is too often neglected in debates about environmental innovation. Section 3 takes a look at the biggest picture of the institutional setting, which imposes constraints and/or facilitates transitions. Section 4 concludes on issues that should be high on our research agenda.
Innovation viewed through organizational lenses
A central lesson from the new institutional economics is that there are many different ways to deliver and monitor goods and services, and all solutions suffer from flaws. Because of these flaws, there is constant pressure to find innovative arrangements. Selection operates among these innovations because some organizational solutions fit better with the characteristics of the transactions at stake.
Transactions cover more than the commercial transfer of private property rights. They encompass
Institutional setting and societal transitions
Let us face it: the analysis of institutions, their fundamental characteristics, and how they interact with organizational solutions to complex allocations of rights, remains in its infancy.
Coase (1960) framed the ‘philosophy’ of the new institutionalists in that respect. Building on his contributions about the flaws inherent to all modes of organization, he pointed out that transaction costs plague the more general problem of the allocation of rights and their distributional effects, which are
This short essay suggests that the new institutional economics can provide powerful tools and useful insights in analyzing environmental problems and assessing potential answers. Three key concepts developed by NIE: property rights, contracts, and transaction costs, are particularly relevant in that respect, since they help understanding the intertwined role of organizational solutions and their institutional settings.
Indeed, when it comes to exploring environmental innovations, the emphasis on
- R.H. Coase
The problem of social cost
The Journal of Law and Economics
- L.E. Davis et al.
Institutional Change and American Economic Growth
- Ménard, C. Hybrid modes of organization. Alliances, joint ventures, networks, and other ‘strange’ animals. In: Gibbons,...
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Trading-off between being contaminated or stimulated: Are emerging countries doing good jobs in hosting foreign resources?
2022, Journal of Cleaner Production
Citation Excerpt :
This judgment is strongly consistent with prior findings of Lau et al. (2014) and Ibrahim and Law (2016) for emerging economies. The national governance indicators such as regulation system quality, corruption monitoring, political solidity, or authority efficacy can play an important role in determining the rights and responsibilities of all parties of the economies (Ménard, 2011). Therefore, better governance means that this country can effectively formulate and enforce environmental protection policies beyond a particular jurisdiction.
This study explores the linear and nonlinear relationship between Foreign Direct Investment inflows (FDI), economic development, national governance, public policies, and carbon risk in emerging countries. Utilizing the panel data of 62 emerging economies from 1990 to 2020, we confirm the inverted-U-shaped relationship of the Environmental Kuznets curve (EKC) between carbon risk and economic development. The results posit robust evidence for the positive impact of FDI inflows on carbon risk in developing economies. Further, the enhancement of governance in developing nations can synchronously lower the carbon risk and the destructive collisions of FDI on the environment in the host countries. We further report that fiscal policies regarding higher tax and public expenditure can relatively reduce carbon risk and substantially reduce the pressure of FDI inflows on the environment degradation in the host countries. By utilizing the cointegrating nonlinear ARDL model, this study further enriches the literature by confirming the long-run symmetric and short-run asymmetric impacts of FDI inflows and economic growth on carbon risk. Overall, our findings highlight the critical roles of government in cautiously receiving FDI inflows and effectively supervising FDI businesses to minimize the negative impacts of this factor on the environment.
Implementing environmental Europe: Non-linearity, nature and institutions
2022, Environmental Science and Policy
Biodiversity loss, climate change and natural resource depletion are major concerns at local, state-wide and global scales. In the European context, addressing these challenges depends largely on the implementation of European Union (EU) environmental policy. This Special Issue sheds light on the making of environmental Europe in localized action and practice, from the perspective of non-linearity of policy implementation processes and trajectories. The different articles address three analytical challenges examining policy implementation of (i) highlighting the ties between the macro and the micro scales of implementation; (ii) taking into account the materiality of ecosystems as well as the diversity of forms of knowledge, representations and values associated with nature; (iii) characterizing the new relational configurations emerging between public and private actors involved in hybrid forms of governance. Through examination of the implementation of EU environmental and sustainable development policies primarily in the French context, the Special Issue contributes to a renewed understanding of policy implementation as institutional change. Further, the articles highlight the values underlying the implementation of environmental Europe and the specific role of science in shaping the representations, instruments and strategies at stake.
Convergence and divergence in the economic performance of wildlife tourism within multi-reserve landscapes
2022, Land Use Policy
The economic performance, through wildlife tourism, of African protected areas (PAs) varies widely. Though proximal management level factors responsible for economic performance and conservation outcomes are well known, underlying institutional, governance and organizational factors, which influence management regimes, have not been as extensively studied. In this paper, an institutional-economic framework forms the basis of a cross-sectional comparison of the local economic contributions of state, private, and communal PAs of the Lower Luangwa Valley in the institutionally centralized country of Zambia, and of the Greater Kruger National Park system in the institutionally devolved country of South Africa. Whereas in South Africa, private reserves neighboring the national park generate the majority of economic benefits, in Zambia, wildlife-related benefits from private and communal PAs are few relative to the neighboring national park. The contrast underscores the role of property regimes and other policies in the economic integration of public parks with surrounding landscapes. From an organizational and governance perspective, the performance of state-managed parks in both settings is tied to an ability to retain revenue, while the performance of co-governed PAs is undermined by power inequities between governing partners. These observations and their implications for policy reform are made clearer through the systematic collection and analysis of PA economic data, which our framework can guide.
Evaluating the governance of a European program by identifying the types of overages based on the example of LEADER programs in France, Spain and Hungary: A problematic role for local institutional arrangements?
2022, Environmental Science and Policy
Citation Excerpt :
Conversely, in the event of a divergence of the learning systems (e.g. in the case of the emergence of local arrangements that are not conducive to this type of integrated and cross-cutting policy), the overages would be much lower or nil. The non-linearity in the implementation of sustainable development policies will thus be highlighted, particularly with regard to the interest of associating public and private actors (who are de facto associated in the implementation of the policy in the LAGs, see Box 1) (Ménard, 2011). The article is structured in four main parts: first there will be a presentation of the selection of the theoretical frameworks, followed by an explanation of the methods used.
The evaluation of the governance of the implementation of the European LEADER approach was carried out in six case studies in France, Spain and Hungary using an analytical grid cross-referencing two complementary theoretical frameworks: the analysis of overages (i.e. the identification of the diverse effects of public policy) and learning phenomena. It was shown that the overages (especially institutional) of the LEADER approach were greater when the governance and management learning subsystems converged. Conversely, the overages remain more limited when the two systems diverge, which is often the case when the program is used as a tool by certain political or economic actors. Overall, these results underline some of the limitations of bottom-up and integrated programs such as LEADER, which are characterized by a relative non-linearity in their implementation.
Common-pool resources and governance in sustainability transitions
2021, Environmental Innovation and Societal Transitions
Common-pool resources (CPRs) are critical in sustainability transitions. They are often important means for environmental and societal innovation, and object of unsustainable extraction and governance practices. We argue why CPRs and their governance matter in transitions and point to issues for further research: (i) conceptualization of sustainability and transitions in light of common-pool resources and governance; (ii) the roles, potentials, and challenges of commoning practices, beyond the market–state dichotomy; (iii) interactions between CPRs and commons with markets/firms and the state/governments in processes of sustainability transitions. These overarching issues bring fresh perspectives to transitions literature: (i) CPRs/commons help advance the integration between ecological and socio-technical systems (ii) non-excludable resources affect entrepreneurial activity and innovation processes in the dynamics of socio-technical system; (iii) CPRs/commons add new viewpoints to the question of directionality of transitions. We conclude by advocating for building bridges with new institutional and environmental economics, and social practice theory.
Understanding collective action for the achievement of EU water policy objectives in agricultural landscapes: Insights from the Institutional Design Principles and Integrated Landscape Management approaches
2021, Environmental Science and Policy
This paper aims to identify drivers and barriers to the achievement of EU water policy objectives in the agricultural sector by adopting an institutional perspective on water quality management at the landscape level. We apply a conceptual framework combining Integrated Landscape Management (ILM) and Institutional Design Principles (IDP) perspectives to analyze cooperation initiatives involving water suppliers and agricultural stakeholders to protect drinking water catchments from agricultural diffuse pollution. Three cases representing different forms of cooperation in rural landscapes in France were investigated on the basis of primary data collected at the local, water-basin and national levels. The results show that the success of multi-stakeholder collective action depends on both local factors such as characteristics of the water resource and stakeholders (knowledge, resources, trust and social capital) and on factors linked to the EU and national water and agricultural policy frameworks. In addition to the identification of drivers of and constraints on the implementation of EU water policy in agricultural landscapes, the analysis highlights the conceptual added value in combining the IDP and ILM approaches to understand policy implementation processes at the landscape level.
Resource and Environmental Economics
International Encyclopedia of Human Geography, 2020, pp. 463-466
Environmental economics is a particular specialization of neoclassical economics which studies two interlinked questions: the problem of environmental externalities and ascertaining the optimal price of a resource, as a means of mitigating the externalities that come with the use of the environment and natural resources. In response, economists have developed a variety of valuation methods, known collectively as nonmarket valuation methods to estimate the value of goods and services whose market is either imperfect or nonexistent. Over the last three decades, the field of valuation has become one of the cornerstones of environmental economics. However, it is not without its critics. For example, ecological environmentalists believe that the neoclassical assumptions that underpin environmental economics ignore the complex roles and impacts of humans in relation to the larger, interconnected ecological system. It has also been critiqued by geographers for failing to deal with issues of justice and equity in the use and misuse of the environment and natural resources.
Financialization and endogenous technological change: A post-Kaleckian perspective
Structural Change and Economic Dynamics, Volume 58, 2021, pp. 221-244
In post-Keynesian literature, Hein (2012b) was the first to incorporate financialization as an influential positive determinant of the rate of technological change. However, financialization is more like a two-edged sword which can affect technological change negatively as well. We capture both the positive as well as the negative effect of financialization on technological change which encapsulates the possibility of multiple equilibria. In analyzing the long run of the model, we endogenize the financialization parameter as well and get richer dynamics than Hein (2012b). We show that under certain circumstances, a higher speed of diffusion of technological innovation, more regulated financial markets, and higher intra-class competition among firms are desirable for stabilizing the economy. Finally, we provide some policy prescriptions for the same.
Economics, Technology, and Environmental Protection: A Critical Analysis of Phytomanagement
Phytomanagement of Polluted Sites, 2019, pp. 569-580
The world has begun to witness the dramatic environmental degradation caused by human activity in the name of development. Sustainable development strategies are tailored to integrate ecology with economy. Scientists are constantly engaged in developing new and green technologies to provide environmentally friendly development strategies. This chapter offers a critical analysis of phytomanagement. It highlights the socio-legal concerns associated with the practical application of phytomanagement techniques and argues for judicious application of this innovative technology.
Modeling the co-evolution of natural, economic and governance subsystems in integrated agri-ecological systems: Perspectives and challenges✰
Ecological Complexity, Volume 40, Part A, 2019, Article 100792
Current agri-ecological systems face the twin challenge of providing sufficient food for a growing global population and of mitigating severe negative environmental impacts from agricultural land-use in terms of biodiversity loss, greenhouse gas emissions, nutrient run-off, soil degradation, and water pollution. Disciplinary research provides detailed answers to specific questions related to the challenges faced by agri-ecological systems. However, it fails to consider the complex interrelationships and dynamics of the different economic, natural and governance subsystems of which agri-ecological systems consist and that need to be considered to address these challenges. In principle, it is possible to develop models that integrate knowledge from the fields of ecology, economics and governance, and consider dynamic system features such as feedbacks between subsystems as well as tipping points. In this viewpoint article, we scrutinize selected integrated agri-ecological system models and find that only very few models address the challenges mentioned above. We suggest further research in three areas: (I) in-depth integration of the governance subsystem in integrated models, (II) more comprehensive inclusion of tipping points in integrated models, and (III) integration of cascading effects where one system change stimulates another system change. Finally, we briefly discuss the challenges of complex integrated modeling in relation to computational power and the necessity to gather expertise from different disciplines.
ICT intermediates and productivity spillovers—Evidence from German and US manufacturing sectors
Structural Change and Economic Dynamics, Volume 37, 2016, pp. 147-163
Recent pre-crisis growth accounting exercises attribute productivity growth accelerations to investments in information and communication technologies (ICT). Stylized facts about a growing US–EU productivity gap are confirmed for Germany, particularly showing no substantially economy-wide ICT effects for German sectors. Tracing the effect from ICT during 1991–2005, this study takes a different view by expanding the value-added concept to gross output including different types of intermediate inputs. The findings suggest that imported intermediate inputs played a more dominating role in Germany, particularly imported non-ICT and ICT materials. In the US, main drivers were domestically-produced non-ICT services and ICT materials, even though imported ICT materials were on the upraise post 1995. Moreover, German TFP growth experienced increasing returns to scale from domestically-produced ICT materials, while US TFP growth originated from imported ICT materials. It will be argued that these different productivity effects stem from different functions of ICT in the production process, which originated in the ICT-production sectors and were passed on to downstream sectors.
Exploration of algal biorefinery frameworks: Optimization, quantification of environmental impacts and economics
Algal Research, Volume 69, 2023, Article 102903
The integrated algal biorefinery (IABR) was considered as a feasible alternative to fossil fuels. After the processes of algae cultivation and pretreatment, the algae biomass with different carbohydrate/lipid contents is split into the carbohydrate process for producing fuel/chemicals and the oil process for producing fuel/energy. Four frameworks of IABR are presented: (i) Scenario 1 (SC1) is designed to produce lactic acid/biodiesel, (ii) Scenario 2 (SC2) is an extension of SC1 by increasing the production of biooil, (iii) Scenario 3 (SC3) is an extension of SC2 by adding the combined heat and power (CHP) process, and (iv) Scenario 4 (SC4) is an extension of SC3 by increasing the production of acetone, butanol, and ethanol (ABE). Through sensitivity analysis of environmental impacts and economics to assess the influences of parameters of four scenarios, it shows that (i) SC1 ensures the lower total eCO2 emission than other scenarios, (ii) SC3 with the low carbohydrate content and the low percentage of carbohydrate process could suppress eCO2 emission, (iii) SC3 with the high lipid content and the low percentage of carbohydrate process has the higher total profit than SC2 due to the extra green electricity from CHP for sale. To address an IABR with high economic potential and low environmental impact, the process optimization of SC4 under prescribed algae carbohydrate/lipid contents shows that (i) the total profit of SC4 is higher than SC3 by 81.8% and (ii) the eCO2 emission of SC4 is lower than SC3 by 51.9%.
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